Investment protection treaties are treaties concluded between states with the aim of promoting and protecting cross-border investment. Such treaties often contain MFN (most favoured nation) clauses. By means of such clauses, the Contracting States undertake not to treat each other less favourably than they treat third countries in the matters covered by the clause. The rights under an MFN clause may also be granted to persons who are in a certain relationship with a Contracting State, such as investors resident in that State.
In the case that the Supreme Court has tried, an investor had requested arbitration before the Arbitration Institute of the Stockholm Chamber of Commerce to examine whether Georgia had lived up to its obligations in an investment protection agreement with the United Kingdom. According to the dispute resolution provision of the agreement, disputes were to be heard by another arbitration institute. However, the investor argued that he had the right to have the dispute heard by an arbitral tribunal at the Arbitration Institute of the Stockholm Chamber of Commerce on the basis of an MFN clause in the investment protection agreement in combination with a dispute resolution provision in another investment protection agreement that gives investors the right to invoke arbitration before, inter alia, the Arbitration Institute of the Stockholm Chamber of Commerce.
Having regard primarily to the wording of the MFN clause, the Supreme Court finds that the clause must be interpreted as covering dispute resolution, including the question of the arbitral institute before which a dispute between an investor and a Contracting State may be adjudicated. The dispute settlement provision in the second investment protection agreement is considered to be more favourable for investors. The Court's conclusion is against this background that the MFN clause, in combination with the dispute settlement provision in the second investment protection agreement, establishes jurisdiction for an arbitral tribunal at the Arbitration Institute of the Stockholm Chamber of Commerce.
Case no. T 9380-24
An English translation of the judgment will be available on the website within a couple of months.
Case name
The "MFN clause"
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